Mrs Smith, 49, from Sutton Coldfield, a former managing director of a subsidiary of Pertemps, has said Mr Watts called her a “sexy nurse” and claimed he had asked her to phone him when she took a shower. She was made redundant after the company she was running, CNA, made a loss of £250,000.

But defending Mr Watts at the tribunal, Ms Watson said: “I’ve heard him tell jokes and some are borderline but nothing I’ve ever been offended by. He’s a visionary leader and an inspirational character.”

The tribunal was told that Mrs Smith went for job interviews at a rival firm when she should have been working at Pertemps.

Andrew Gilchrist, managing director of Interaction Recruitments, said he held two job interviews with Mrs Smith in March 2009 on Pertemps’ time.

Mr Gilchrist said: “We discussed the reasons why her role at Pertemps was not working. These were meetings to establish if there were roles that Debbie Smith could fit into.”

The legal team acting for Mrs Smith denied she was seeking a move away from Pertemps and that the meetings were designed purely to harness important feedback for her to take back to Mr Watts and Pertemps.

Mr Gilchrist also dismissed as “disgraceful” the suggestion he had given evidence to “curry favour” with Mr Watts, an important player in the recruitment industry.